KOLKATA (miningweekly.com) - India’s Coal Ministry has prepared a note on the radical restructuring of State-owned producer Coal India Limited (CIL), which includes breaking up its monolithic holding company structure to sell off to large equity or private investors.

The restructuring proposal comes just ahead of the appointment of a new Indian government led by rightist Hindu nationalist Bharatiya Janata Party (BJP), which is headed by Prime Minister designate Narendra Modi, who will be sworn-in on Monday evening.

The restructuring of CIL, according to the Coal Ministry note, was to improve efficiency and productivity as the miner has been missing production targets for the past several years. CIL also needed to shorten the time it took to bringing new coal blocks allocated to it into production, the note said.

Officials said that the note had been prepared to enable the new government to hit the ground running, as political leaders had on the campaign trail made it clear that energy security would be a priority for the new government.

Among the ideas floated was breaking up the holding company structure of CIL which saw the latter controlling seven operating companies that were responsible for mining operations. To instil greater and faster decision-making ability, it has been suggested that CIL be dismantled and all the seven subsidiaries be converted into standalone independent companies.

Moreover, since provincial governments needed to be actively involved in the development of blocks within their territory and delays were often attributed to local level issues, it had been suggested that provincial governments be made equity stakeholders in existing CIL subsidiaries once they were converted to independent companies.

At the same time, although the privatisation of CIL through disinvestment of equity to private investors does find mention in the Ministry note, the latter at the same time played it cautious mentioning that denationalisation may not be the most credible or practical option.

Privatisation would entail amending the Coal Nationalisation Act and even though the new government had a clear majority in the Parliament, such a move may not be politically expedient so early in tenure of the government, officials pointed out.

In 2013, the Coal Ministry appointed consultants Deloitte to prepare the report on restructuring CIL and the consultants had submitted a draft report while the final report was still awaited. Details of the draft report were not available yet.

Officials said that unlike several government notes and proposals, the one on CIL restructuring was being accorded importance considering that it was expected to figure high on the presentation to be made directly to Prime Minister Modi.

The secretaries of the various Ministries had been directed to make presentations on their respective departments directly to the Prime Minister, soon after his swearing in on the evening of May 26, and not to the Ministers who would be appointed and sworn in along with him.